Gartner’s Andrew Frank spells out three potential outcomes of the rising tensions between the data brokering economy and demands for consumer privacy – and how the marketing and advertising industry can navigate each possibility.
Legal restrictions, browser cookie deprecation and new privacy features in iOS and Android are decimating digital advertising’s data foundation. In addition to privacy and regulatory pressure, there is strong economic pressure on the industry to adopt a new set of common standards that target and measure ads to contain waste, fraud and clutter.
Because fragmentation and uncertainty will persist for a number of years, marketers and advertisers need to prepare for multiple scenarios to avoid being caught in an unproductive dead end while their more agile peers steal market share.
There are three ways that we at Gartner anticipate the consumer data privacy space playing out based on legal, platform and market forces. Among many factors, the apportionment of public trust – or the lack thereof – is a complicating factor that plays a major role in determining outcomes, which makes this scenario forecasting exercise all the more difficult.
Scenario 1: big tech companies adapt to regulations and govern the market in a walled garden world
In the walled garden world scenario, privacy regulations restricting unconsented tracking reinforce the dominance of walled gardens by amplifying the advantages of pervasive consumer relationships and control of endpoint infrastructure. As consent fatigue and revenue depletion diminish the appeal of independent websites, walled gardens offer platform-wide consent controls that are managed across multitudes of user accounts and infrastructure platforms (think the Google Chrome browser or Amazon’s commerce services).
As regulators in Europe and the US seek to rein in the power of big tech platforms with initiatives such as the Digital Markets Act, which went into force on November 1, the platforms may meet their efforts with carefully curated disclosures and calculated divestitures. In this scenario, increasing pressure from privacy advocates and government regulators minimizes the utility of Privacy Sandbox-type initiatives and drives advertisers and publishers into closed, protected environments controlled by the big tech providers.
What can marketers do?
Most organizations have already shifted ad budgets toward Google, Facebook, Amazon and a dynamic menu of smaller walled garden properties as privacy restrictions take their toll, but other recommendations when planning for this scenario include the following:
Adopt platform-based analytics tools such as Google’s Ads Data Hub or Amazon’s Marketing Cloud to assess and optimize platform-specific marketing performance. Ensure staff and agencies are sufficiently adept at these tools
Work with agencies to develop consistent key performance indicators and use continuing near-term access to third-party cookies and device IDs to develop models to reconcile data across walled garden environments
Scenario 2: Permissioned data and open architecture level the field for media commerce in a consent economy
In this second scenario, the market develops standard consent frameworks and content taxonomies that establish stable equilibrium among consumers, regulators, marketers, publishers and technology providers, similar to The Trade Desk’s UID 2.0 and the Interactive Advertising Bureau’s consent taxonomy. Regulators largely succeed in reining in big tech platforms through effective breakups and consent decrees that enforce open standards and protocols on digital infrastructure components such as mail clients, browsers and app platforms.
The growing importance of over-the-top (OTT) media and connected TV (CTV) channels that are less under the influence of walled gardens contribute to the viability of this scenario. As smart TVs and streaming devices capture an increasing share of consumer attention, power returns to media companies, independent measurement providers and trade associations defining emerging standards for device and content identification and metrics.
Likewise, as ad-supported media platforms expand, publishers and retailers would build new offerings based on informed consent relationships with consumers and contextual targeting methods. Adtech providers develop cookieless targeting systems with privacy-by-design features that respect user choices and help marketers refine targeting and measurement practices with less reliance on personal data.
What can marketers do?
Regulatory compliance has already accelerated enterprise adoption of consent and preference management platforms as cookie concerns escalate first-party data collection efforts. Other recommendations to prepare for this scenario include the following:
Establish comprehensive governance over customer data practices
Encourage customers and prospects to share relevant data by offering transparency, control and credible value propositions
Invest in cookieless targeting and measurement tactics that use segmentation and contextual cues to optimize performance
Scenario 3: Out of the ashes, a better ecosystem emerges based on identity innovation
In this scenario, startups and big tech providers work with industry groups to develop new, decentralized technologies and business models based on web3 concepts that redefine the framework of consumer identity and ways data is used in digital advertising. Personal data is under the secure control of users as marketers develop more compelling, persona-based abilities to offer valued, personalized experiences – and efficient, standardized media buys – without identification. Regulators turn their focus to enforcement, data security and deceptive practices.
As more consumers and marketers experiment with web3 and metaverse experiences, many chief marketers are becoming aware of these visions. But significant challenges remain: for an identity innovation scenario to emerge, the industry would have to abandon the current paradigm of ad mediation and fulfillment for one that supports a richer, more active role for consumer agency.
Increasing the bandwidth of data and dialogues available to marketers outside their own domains while balancing privacy and security is a long-term challenge.
What can marketers do?
Organizations have already recognized the need to ramp up experimental design and testing capabilities in the absence of a clear solution to growing data deficits, but other imperatives under this scenario include the following:
Work across business units to build competency in AI, blockchain and metaverse experience – including data capture and analysis
Analyze privacy and identity implications when evaluating new experience projects and campaigns, especially when targeting unknown consumers in environments such as games and virtual product placements. Prioritize learning over performance in these initiatives
Seek opportunities to detect and act on new real-time signals that are independent of personal data, such as how user behavior can predict receptiveness to different types of messaging
Focus on creative inspiration and ideas for advertising and content that can create breakthrough opportunities for growth, even in worst-case targeting and measurement scenarios
Andrew Frank is vice-president and distinguished analyst at Gartner.